Standing Committee B

[Mr. Win Griffiths in the Chair]

Waste and Emissions Trading Bill [Lords]

Michael Meacher: On a point of order, Mr. Griffiths. May I make a brief statement? Last week, hon. Members voiced some disquiet about the availability of a regulatory impact assessment for the Bill. My Department's officials and I are concerned about that. I need hardly say that the Department has nothing to hide, and that it has been pro-active in complying with the spirit and letter of regulatory legislation.
 I confirm that the first RIA has been available on the Department's website since 15 November 2002, when the Bill was introduced in another place. I confirm also that the updated RIA was put on the website on 3 April, the day of the Committee's first sitting. To reach that website, one has to type ''waste and emissions trading bill'' into the search field on the home page of the website or in the indicated field on the search page. In addition, the first edition of the RIA has been in the Libraries of both Houses since 15 November, and the updated RIA has been available in both Libraries since Friday 28 March. I hope that that meets the concerns that were expressed about the availability of the RIA in its original and updated forms.

John Hayes: Further to that point of order, Mr. Griffiths. First, I thank the Minister for his typical courtesy in drawing those matters to the attention of the Committee. It would be helpful if that sort of information could be included in the explanatory notes. Before raising the matter this morning, I checked the availability of the regulatory impact assessment with the Clerk of the Committee—he will no doubt confirm it—and received the assurance that it was not available. However, there was some uncertainty and confusion—for the sake of brevity I put it no more strongly than that. I am grateful for the Minister's courtesy, but this matter could provide a useful lesson.
 Secondly, Mr. Griffiths, I ask whether the blinds can be lowered as I am suffering considerable discomfort because of the bright sunlight.

Win Griffiths: I am sure that that can be arranged.Clause 7 Trading and other transfer of landfill allowances

Clause 7 - Trading and other transfer of landfill allowances

Norman Baker: I beg to move amendment No. 11, in
clause 7, page 5, leave out lines 40 and 41.
 The sun is shining a little on the Liberal Democrats this morning, and I am happy to leave it there. However, I concur with the hon. Member for South Holland and The Deepings (Mr. Hayes): it would be useful if the information that was available could be drawn to the attention of hon. Members. It need not be provided, but it would be useful if we knew that it was available and had been told how to gain access to it. 
 The amendment deals with trading and other transfers of landfill allowances. My hon. Friend the Member for Guildford (Sue Doughty) and I seek to remove subsection (3)(f), which would allow local authorities to employ brokers to facilitate such transfers. We have two reasons for wanting to remove that provision. First, the transfer of allowances ought to be simple. Waste disposal authority employees will be knowledgeable about such matters; they will have been responsible for letting contracts and will therefore know how to do the job. I suggest that they are capable of dealing with their opposite numbers in other authorities to facilitate such transactions. The idea that they might need, or would even want, to employ brokers to facilitate transfers is slightly worrying. 
 Secondly, I can imagine local authorities running up huge bills by employing brokers. Doubtless their services will not come cheap, as they, like solicitors and lawyers—I do not wish to libel any of the latter who might be in the Room—have an interest in making things go on for as long as possible. I believe that they will add nothing to the process. Indeed, good working relationships between waste disposal authorities, which will be essential, could be marred and undermined by the intrusion of a third person who might wish to push an authority further than it wanted to go. That would introduce a jarring note into an otherwise useful process. I fully support the concept of a landfill allowance, but it should be left to local authorities. 
 I am also concerned that there is no restriction on who can qualify as a broker. Could Biffa, for example, provide brokers? If so, that is dangerous and unwelcome; it could lead to dissension among local authorities and increase costs. I hope that the Minister will think very carefully about it.

Jonathan Sayeed: It is a pleasure to serve under your chairmanship, Mr. Griffiths.
 The amendment was proposed by my noble Friend Lord Dixon-Smith, and it is interesting that Liberal Democrat Members have taken it up. The argument is that the Bill provides for the intervention of third-party brokers in the trading of waste disposal allowances. Lord Dixon-Smith considered that to be wrong; he believed that the only parties that should be allowed to trade in allowances are WDAs, of which there are a limited number. He contended that all local authorities know and work with one another; they are familiar with arrangements across boundaries and counties. He believed that normal meetings and lines of communication were sufficient and would allow 
 WDAs with surplus capacity to locate WDAs that were deficient in capacity and do business with them over the phone. 
 The Bill also provides for the necessity of regulation to define how the third party should behave when involved in trading practices. Lord Dixon-Smith believed that to be unnecessary. In response to those arguments, Lord Whitty suggested that the measure was intended to give local authorities flexibility when operating the scheme and, at the same time, to safeguard public interest in relation to propriety. If they wished, local authorities could choose to contract out their operations or buy in professional advice. 
 Lord Whitty said that there was no question of additional costs. I found that a surprising statement. He went on to say that if local authorities wished to outsource their activities and if professional brokers became involved, the Government would need to regulate their involvement, so the Bill covers that eventuality. He did say, however, that no local authority would have to employ a broker. 
 Understandably, brokers will engage in such activities to make a profit. Can the Minister tell us how much profit brokers are likely to make? Obviously, any profit made will be at a cost to the local authority, the WDA, and if that cost is a significant burden, will it not be transferred to the consumer? Do we need what may be unnecessary insurance that will impose an extra layer of administrative and bureaucratic burdens? It will take precious funds away from local authorities—funds that should be spent on investment in sustainable waste management infrastructure. 
 Amendments Nos. 38 and 11 both seek to amend clause 7, and I wonder whether we need the clause at all. Would not it simplify procedures if we got rid of it and streamlined the bureaucracy?

John Hayes: My hon. Friend referred to the debate in the other place and to the nub of the argument, which is whether the clause will create additional burdens, bureaucracy, uncertainty and confusion. It seems to me that a forceful argument can be made for saying that bringing another party into the process will do exactly that. As it is, local authorities will have to undergo a substantial process of change in adapting to the Bill's constraints and demands. We raised the important issue of flexibility when the Committee last met, and my hon. Friend has rehearsed it again. It is important that local authorities have enough flexibility to meet these demanding targets.
 Conversely, there is also the issue of clarity. The proposed change is significant and, although the message is simple, the implementation will be complex, given the complicated relationship between authorities, and their different profiles and performance, which we discussed at our previous sitting. Many people are concerned that the addition of a third party will reduce clarity and add to confusion. 
 I would therefore like the Minister to be tested on the issue, and I am interested to hear his views. Like 
 me, he will have studied the report of the Lords debate. I have it close to hand, and I was reacquainting myself with it as my hon. Friend spoke, because I wanted to be clear about the arguments. The Minister will be aware of those arguments, which were put in a measured and sensible way by Members of the House of Lords with some expertise in this field. I would like firm assurances that the clause will not lead to extra bureaucracy in the way that my hon. Friend suggests.

Michael Meacher: The Minister will be tested. Indeed, we are starting by discussing a matter that has caused some concerns, which I will try to allay.
 As has been said, the issue of brokers was dealt with in another place, and my ministerial colleague, Lord Whitty, explained the position. The amendment would prevent regulations from making provision for licensing and regulating persons engaged as brokers in the transfer of allowances. The Bill does not prevent the use of brokers—of course, it does not require them either—and the current provision is intended only to regulate and license such persons. However, I acknowledge the intention behind the amendment, and I appreciate the concerns that have been expressed. 
 Let me explain brokers' intended role in the trading scheme. First, the allowance scheme is not intended to be speculative. Landfill allowances can be held only by waste disposal authorities; indeed, clause 7 expressly prevents regulations from authorising the acquisition of allowances by anyone other than a WDA. However, the Bill does not prevent WDAs from using brokers. WDAs that feel that a broker's expertise in markets would help them to trade more effectively will be able to make use of that expertise. That is the purpose of involving brokers. 
 Let me make it clear, however, that we do not intend to help to create a whole new breed of broker to draw money out of the system—absolutely not. Local authorities are used to working with each other, and many have particularly good experience of working in partnership on waste management issues. I fully expect that most WDAs will choose to negotiate with known colleagues when trading allowances. However, to many authorities, the idea of trading is, frankly, alien, and smaller authorities might not have sufficient expertise to deal with such a scheme without the use of outside help. 
 The use of brokers is not compulsory; it is simply an option. If a local authority does not want to use them, it will not do so. In our view, there is no value in forcing WDAs to trade in a certain way that is not suitable for them, particularly before consultation on the issue has taken place. If brokers are used, we believe that they should be subject to regulation. That is different from the situation in most private markets, which are self-regulating. However, I am sure that hon. Members would agree that, where public money is concerned, self-regulation might not be sufficient to ensure public trust in the system.

Norman Baker: Is the Minister proposing that there should be any restriction on who may qualify as a broker? More specifically, do the Government intend
 to ensure that those who have a commercial interest in the outcome of negotiations cannot act as brokers?

Michael Meacher: Yes, there will be a requirement to be licensed as a broker in order to perform this particular role. There will be clear rules of engagement, which will be covered in regulations.
 The hon. Member for Mid-Bedfordshire (Mr. Sayeed) asked me about profit, but I cannot possibly say what the profit might be in any particular contract. It would depend on the individual arrangements between the broker and the WDA. I repeat, however, that it will be a matter for the authority, and if an authority does not want to be involved with the associated bureaucracy and expense and thinks that it can do the job perfectly well itself, I am sure that it will not engage a broker. That seems to be perfectly satisfactory.

John Hayes: I omitted to welcome you to the Chair, Mr. Griffiths, which was an unforgivable and unpardonable error, so I welcome you now, and hope that you will forgive me none the less.
 It seems important to establish what kind of people the brokers might be. It has been suggested—the Minister sensibly referred to the difference between large and small authorities in this respect—that an authority might act as a broker itself or have an in-house service, which it might also offer to others. However, that would seem to be precluded by the idea that anyone who might benefit from the outcome of the negotiations should not be involved in the process. Then again, given that authorities are used to dealing with each other, that would not seem to be unfeasible, especially, as the Minister rightly says, if one takes account of subsection (2)(a). 
 That provision makes it clear that the private sector cannot acquire landfill allowances, which might act as a disincentive for the private sector to get involved. Some sort of in-house arrangement would help to provide the support for smaller authorities which the Minister rightly identifies as an issue.

Win Griffiths: Order. I remind hon. Members that interventions should be kept short.

Michael Meacher: I should say that I, too, failed to welcome you to the Chair, Mr. Griffiths, and I wish to correct that oversight.
 I do not believe that WDAs that have a broker operating with them will be precluded from offering that expertise to others, but it is unlikely to happen in most circumstances. Subject to consultation, rules will be introduced and regulations laid before Parliament. We want to keep the arrangements as flexible as possible. Our only purpose is to try not to introduce the unnecessary involvement of brokers—quite the opposite—quite the opposite—but to enable smaller authorities that could use it to do so. There is no requirement and it will not happen often. 
 If authorities trade—something that is initiated by the Bill and is not a customary exercise for most of them—they should be able to draw on the best expertise available, and that should not be self-regulated. There should be proper regulation; no-one 
 will be able to declare himself a broker and make a nice tidy profit.

Jonathan Sayeed: My hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) made an interesting observation that the Minister has not fully addressed. We know that local authorities are trying to specialise and are offering other local authorities their expertise. If, under the regulations, an authority sets itself up as a broker, can it offer that expertise to other local authorities?

Michael Meacher: I am glad to confirm that it can.

Norman Baker: The hon. Member for Mid-Bedfordshire did not say so but implied that I had stolen Lord Dixon-Smith's amendment from the Lords. I can assure him that the amendment originated during a long train journey from Lewes to London. For reasons best known to South Central Trains, that journey took a circuitous route, which gave me the opportunity to read the Bill and to suggest amendments. However, the fact that I reached the same conclusion as the hon. Gentleman's colleague in the Lords would suggest that there is merit in the amendment. Two people think that it is worth pursuing; the Minister, sadly, does not make a third.
 The Minister is right to say that the Bill merely allows local authorities to use brokers and does not require them to do so; that is perfectly proper. However, I have a feeling that once one or two local authorities start using brokers—perhaps the larger ones that can afford to do so—they will gain a perceived competitive edge. The consequence will be a cascading process, by the end of which virtually all authorities will have brokers. Once one does it, the others will follow. 
 The Minister rightly referred to the good partnerships between waste disposal authorities—we heard about them in an earlier sitting. Those will be put in jeopardy by arrangements with a jarring third party that will gain influence from one over the other. After all, the point for a WDA of employing a broker will be to maximise its benefit, probably at the expense of another authority. It will be in the broker's interest to reach an agreement on transfer that will be beneficial to one authority and detrimental to another. If the broker is not to gain the edge for the authority, what is he or she there for? The situation will cause disharmony between WDAs. 
 I am grateful to the Minister for saying that the regulations will ensure that there are restrictions on the types of person who can be licensed. I hope that he means, by implication, to exclude those who have a direct commercial interest. Employees of companies such as Biffa—I am not picking on it, merely using it as an example—would, therefore, be excluded. That is important, because they might have an interest in not following the process properly. 
 Let us say that authority A employs as a broker a company involved in waste disposal. If that company has a contract with authority B it might not wish to comply with the wishes of authority A; it may be in its interest to keep up the contract volume with 
 authority B. The situation would be unclear due to the conflict of interest between the broker and the WDAs. 
 The hon. Member for South Holland and The Deepings made an astute point about the potential role of WDAs in the brokering process. Local authorities are developing in-house specialities and seek to market those to neighbouring authorities. There is nothing new about that; for example, the district council of which I was a leader some years ago did the same thing with waste collection, street cleaning and grass cutting. Establishing a speciality and selling it to other local authorities is standard practice in local government. The Bill makes it possible for waste disposal authorities to set up their own brokerage and to market services to others. The Minister said that that is not precluded. Those services could even be marketed so as to benefit the originating authority, thereby creating a conflict of interest. The system that the Minister is setting up is not clean.

John Hayes: That is true, but if the amendment were accepted, and lines 40 and 41 of page 5 were deleted, the process that the hon. Gentleman describes, whereby a larger authority provides a service, would be precluded. I asked the Minister whether that would be precluded under existing arrangements or other provisions in the Bill and he assured me that it would not. It would not be unhealthy for local authorities to co-operate in that way, but, even though I do not make a definitive judgment on the matter, that route would be closed if the amendment were accepted.

Norman Baker: I can tell the Minister that I shall not press the amendment, because it is a probing amendment. Also, I accept that its effect would be to weaken the structure that I wish for, because it would remove the licensing arrangements, which, under the circumstances, it is better to have than not. The amendment's purpose is to raise the issue, which we have done successfully. However, at the end of this short debate, I am more convinced than ever that brokers should not have a role.

Michael Meacher: I understand that the hon. Gentleman will not press the amendment, so I shall not detain the Committee. However, I should like to comment briefly on some of the remarks he made in his second contribution which are additional to what he said at the outset. He believes that the provision could undermine partnerships between waste disposal authorities, although in my view it certainly would not. There is no obligation on authorities; they will engage in the process only if they believe that doing so is additional to the expertise that they have from those partnerships. He is right that there is specialisation among local authorities and WDAs. There is no reason why the provisions should interfere with that specialisation and its availability to another WDA.
 The hon. Gentleman says that once the larger authorities start to use brokers there will be a cascade effect throughout all WDAs. I do not believe that that will happen, and there is no reason why it should. It is a matter not of giving a competitive edge, but of providing expertise in trading to an authority that does not yet have it. Once the authority has that expertise it 
 will stop using a broker. The provisions are for authorities that are starting on a process that they are very unused to. 
 Lastly, conflicts of interest from brokers will be covered in regulation and subject to consultation. I appreciate that the hon. Gentleman will not press the amendment, but I hope that he will take on board my belief that his fears and apprehensions are not grounded.

Norman Baker: Of course I accept that the Minister honestly holds the view that my fears and apprehensions are not grounded. I think that the matter might turn out quite differently, but history will be the judge of that. However, I disagree that the use of brokers will merely bring expertise rather than provide a competitive edge—expertise brings about a competitive edge.

John Hayes: I want to press the hon. Gentleman on this important point. I do not like to defend the Minister too robustly in Committee, but I like to find common cause where I can. The hon. Gentleman should say precisely what he would recommend to a small authority without such expertise. He is right to say that expertise gives a competitive edge, and authorities that do not have such experience would not have that edge. Where would those authorities go if the amendment were accepted? They would not be able to go to another local authority, which would be my ideal, and they would not be able to go to a private third party.

Norman Baker: There is a potential difficulty for a small authority, but it would be less of a difficulty than the one that would be caused by the structure that will be created through the use of brokers. A small authority, faced with a large WDA with brokers, will have no alternative but to employ brokers to try to even matters up; its costs will then increase accordingly. Opinions might differ, but that is my honestly held view.
 My other concern is about what will happen to the authorities that work together, which was referred to last week. That has not been thought through in this context. I am grateful to the Minister for saying that he will regulate to ensure that conflicts of interest are prevented in this situation. I simply ask him to consider whether conflicts of interest that affect waste disposal authorities should be covered by the regulation. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

John Hayes: I beg to move amendment No. 38, in
clause 7, page 6, line 1, leave out from 'for' to end of line 3 and insert 
 'the allocating authority to make available to each waste disposal authority full financial resources for it to comply with any requirement imposed on it by or under provision of the kind mentioned in paragraph (h) together with all regulations as set out in sections 11 and 12;'.
 We move to a different aspect of the clause. We have spoken a great deal about the extra obligations and new responsibilities of local authorities. There has been a general acceptance that that will require the acquisition of expertise. We know that there will be obligations to collect, to register and to record various 
 bits of information. Those are covered in this clause and in clauses 11 and 12. There is no doubt that it will be important to keep the records in a way that ensures their probity and efficiency. 
 The amendment deals with the additional cost of that process. I am sure that local authorities are already worried about the matter. I do not want to make an overtly party political point this early in the morning, but this has to be seen in the context of the seemingly ever-increasing number of unfunded statutory requirements. They have a cumulative effect. We have spoken about regulatory impact assessments. The cumulative regulatory and financial impact of measures such as this have to be taken into account. I worry that the process will create an extra burden and put an extra strain on the already tight budgets of local authorities. 
 We argue in the amendment that full financial resources should be made available for the waste disposal authority to comply with the requirements imposed on it under the provisions of subsection 3(h), and in clauses 11 and 12. That is not unreasonable. It will give an important signal to local authorities that the allocating authorities are planning to support them and to work in partnership with them to help them to meet the targets. 
 I have spoken before about the trepidation that will undoubtedly be felt by those authorities that are not at the forefront of performance in terms of the objectives outlined in the Bill. We need to reassure local authorities, and we certainly need to signal that the collaborative approach, which I have constantly advocated in Committee, is genuine. To that end, we need to consider the resource implications of the collection, registration, storage and use of information and other responsibilities outlined in the Bill. I hope that the Minister agrees. It is never easy for a Minister to make such a commitment, but I know that he shares my view that it is vital that this is done properly and co-operatively. In that spirit I urge the Committee to support the amendment.

Norman Baker: I am sorry to say that I cannot agree with Conservative Members on amendment No. 38, although we have found common ground in relation to other amendments. Waste disposal authorities must be required to provide that information and must be subject to a penalty for not doing so. That is straightforward. If there were no such requirement or no such penalty, what would prevent them from not providing any information at all? We must have freedom of information so that we know what is happening. The acquisition and disposal of allowances must be an open process, because if the process is closed, it has the potential to be corrupt. The protection against corruption is openness, so it would seem to be perfectly proper to require such information and to impose a penalty if it is not provided. It does not seem to be an especially onerous task for waste disposal authorities to collect that information and make it available. We are not asking them to do a great deal.

John Hayes: I am uncertain whether the hon. Gentleman has become a little confused on his long train journey. Is he talking about penalties or the additional resources required to meet the statutory requirements to collect, register and maintain information? They are separate issues. If he is talking about penalties, we may be moving on to another debate, but I do not want to do your job for you, Mr. Griffiths, because that would be impertinent. I just want to help the hon. Gentleman to collect his thoughts after his, clearly arduous, journey.

Norman Baker: I appreciate the hon. Gentleman's concern for my journey. I am talking about both the penalty provision, set out in clause 7(3)(i), and the second part of the hon. Gentleman's amendment, because the two are linked. Let me turn now to the issue of resources for local authorities, with which the hon. Gentleman wants me to deal.
 As I was saying, I do not believe that the provision will be terribly onerous for waste disposal authorities. The collection of information about the acquisition of disposable allowances would not seem to require a huge amount of paperwork, copious numbers of staff or people beavering away while burning the midnight oil to fulfil their obligations. It seems to be a simple matter. However, I have sympathy with the hon. Gentleman's general point that a huge amount of bureaucracy and extra cost should not be loaded on to waste disposal authorities, which is why, as the hon. Gentleman may have noticed, my hon. Friend the Member for Guildford (Sue Doughty) has tabled an amendment to hypothecate the moneys from fines and return them to waste disposal authorities.

John Hayes: I want to be absolutely clear about what the hon. Gentleman is saying. I am unsure whether he is saying that the requirement will be a burden, which needs to be covered by what he describes as hypothecation—indeed, the Conservatives have tabled a similar amendment—or whether he does not think that it will be a burden. He says that people will not be burning the midnight oil and authorities will not require extra staff and, presumably, extra expertise, although he told us previously that expertise would be very important. So is he saying that the provision will or will not be a burden on local authorities and how does his opposition to our amendment fit with the amendment tabled to a later part of the Bill by the Conservatives?

Norman Baker: I do not know whether my argument lacks clarity or whether the hon. Gentleman is being obtuse. Either or, perhaps, both is the answer. I am saying that waste disposal authorities will face a general increase in responsibility and a greater administrative burden. Taking all those things together, it is right that there should be some financial support for waste disposal authorities, and I suggest that it should come from the hypothecation of fines and penalties. That general proposition covers the whole Bill. I happen to think that this particular administrative burden is light, so it need not worry us too much, but in so far as it exists it would be covered by the hypothecation of fines.
 I shall not pursue the matter further except to say that the amendment will remove the sanction should 
 waste disposal authorities not report information. That is wrong. The requirement is not onerous; and if there is to be no penalty, why should the authorities comply? I hope that the Minister will agree that the provision should remain in the Bill.

Jonathan Sayeed: Speaking specifically about amendment No. 38, the duties required under paragraph (h) stipulate that WDAs should provide information on the acquisition and disposal of allowances. Likewise, clauses 11 and 12 impose burdens regarding the administration of the system—for example, monitoring duties, having to make evidence and information available, the maintaining of records and so on. I understand that failure to comply would lead to a penalty being imposed on the WDA—another fairly extensive burden. It will not be without cost, and although one upholds the concept of such a burden in the interests of transparency and the accountability of local government, it bothers me that nowhere in the Bill can one find any mention of funding being made available to WDAs to comply with those requirements.
 I believe that the Bill needs an extra provision to make clear that adequate resources will be made available to WDAs to comply with the extra requirements that the Bill imposes on them. Friends of the Earth has estimated that the total additional cost of separated collection will be £17 per household per year, which is a total of just under £400 million a year for the whole of the United Kingdom. Councils are already spending £200 million a year, which leaves a shortfall of about £200 million. Will the Minister tell us where the extra resources will come from? That is a particular problem in the light of the local government settlement for rural authorities, as they often find waste collection much more difficult than urban authorities.

Norman Baker: I broadly agree with the hon. Gentleman about the general administrative burden—of the Bill, rather than of the clause. We have a common cause on that. Will he say how much that administrative burden will cost the waste disposal authorities, particularly providing information on the acquisition and disposal of land?

Jonathan Sayeed: No; I will not tell the hon. Gentleman because I cannot assess it, and I do not have an army of civil servants to make the calculations. However, I can say that all the way through the Bill, extra duties are being imposed on local authorities and that they have costs. I stress the fact that the local government settlements for rural authorities have been extremely poor. Although they were dressed up to look much better as percentage figures, the extra burdens imposed on those local authorities are, in some cases, less than inflation—let alone the inflation in salaries, national insurance and other such things.
 My first question is, where is the money coming from? Secondly, this part of the Bill does not contain adequate recognition of the two-tier system of local government in the management of waste. It is unclear how the waste disposal authority will pass to the waste collection authority the moneys that the collection 
 authority needs to fulfil its duty to provide waste in such a form that the disposal authority can make best use of it. Unless the Minister and the Bill give us a degree of clarity, the Bill is likely to fail in its execution.

Michael Meacher: I have sympathy with some of the concerns that have been raised. However, let me first express my gratitude to the hon. Member for South Holland and The Deepings for undertaking my role. He saved me the trouble of cross-examining the hon. Member for Lewes (Norman Baker), although I shall not intrude too much on private grief.
 Obviously, this is an important issue. The hon. Member for Mid-Bedfordshire opened it up a little more, and I shall try to respond to his points, too. Central Government give local authorities a significant number of duties, and it is important that authorities have sufficient resources to carry them out when we add to them. I should tell the hon. Member for South Holland and The Deepings—I am sure that there is a way of rendering the name of his constituency more incisively, although I should probably keep to the proper title—

John Hayes: It is rather elegant.

Michael Meacher: Yes.
 The truth, however, is that the Government have tried to introduce a rule stipulating that local authorities on which we place extra burdens—I do not like that word, so perhaps I should call them functions—should be properly funded. That was not always the case under a previous Administration, but that is what we are trying to do. We are certainly not piling on new regulatory instruments without ensuring that they are properly funded. As I shall make clear, authorities are certainly fully covered in the case of waste.

Gregory Barker: It is important to clarify that that is not the experience of countless administrations, including Rother district council in my area. Its leader has said that the new constraints mean zero provision for the cost of setting up a new system. He added that the Minister cannot simply
''will the end without willing the means.''
 Eastbourne, in East Sussex, is introducing a new recycling system, but council tax has had to go up by 39 per cent. to fund it. The Minister talks about new resources being commensurate with the responsibilities that are being piled on local government, but his comments fly in the face of the reality.

Michael Meacher: I do not agree with that, and I shall explain why I am convinced that the hon. Gentleman is wrong when the point arises logically in my comments.
 The amendment would not be consistent with the way in which money is allocated to authorities. As hon. Members know, that is done through the block environmental, protective and cultural services grant element of the revenue support grant, which is set every three years in the spending review. It would not be consistent to provide funding outside the block grant, as proposed. 
 In any case, the duty to provide information under the Bill—here, I do agree with the hon. Member for Lewes—should not prove terribly onerous. The amendment relates to providing extra information, but the hon. Member for Mid-Bedfordshire is hyping it a bit when he says that there will be fairly extensive new burdens. That will not be the case. 
 The system that the Environment Agency proposes to use in England and Wales to calculate the amount of biodegradable municipal waste sent to landfill will require WDAs to use only the records that they already keep. For the necessary calculations to be made, WDAs will need to tell the monitoring authority—we will discuss who that is in later clauses—only the quantities of municipal waste arisings and of waste that is diverted through recycling, composting, incineration or mechanical-biological treatment. As most WDAs are already collecting such information, the additional burden will be only one of reporting it to the monitoring authority. That cannot be construed as anything other than a fairly minor extra cost. Scotland and Northern Ireland are likely to take a similar approach. 
 As I said at Second Reading, I am aware that there will be some costs involved, but the Government already provide waste disposal authorities with significant extra resources for waste management to enable them to carry out the duties to which the hon. Member for Bexhill and Battle (Gregory Barker) referred. For example, in the last two spending reviews we substantially increased the provision for environmental, protective and cultural services, including waste. Spending review 2000 increased provision in this block by £1.1 billion over three years, and spending review 2002 increased provision by a further £671 million over the three years to 2005–06. Over those five years—the third year of the first review period is the first year of the second review period—the extra sum in this part of the revenue support grant, which is predominately although not entirely about waste, is being increased by slightly more than £1.75 billion. That is a very substantial sum. Expenditure in the three financial years 2005–06 to 2007–08 will be dealt with in spending review 2004, which we have already begun to examine. 
 The hon. Member for Mid-Bedfordshire referred to the Friends of the Earth calculation about separate collection, and that is the subject of a private Member's Bill. Friends of the Earth's calculation—these are its figures; I am not confirming them—is that it could cost £17 per household and up to nearly £400 million for the whole country. Even if those figures are correct, the extra provision more than adequately covers them. I give the same answer to the hon. Member for Bexhill and Battle. He should ask the leader of the council what extra amount the council received in the spending review periods for EPCS. That is the critical consideration. I would like to know how the amount that his council received compares with the figures that he quoted.

Norman Baker: If the Minister believes that the money from central Government more than covers the
 duties of local government, why is he opposing the private Member's Bill that is going through the House?

Michael Meacher: First, I am not opposing it; I said that I was content for it to proceed to Second Reading. There was no Division in the House because there was general agreement on all sides. There were two issues in the Bill that I would have to consider further. One is the 50 per cent. recycling rate; the other is the mandatory waste management strategy. I will return to those when the Committee discusses that Bill. We may reach the latter of those much earlier in this Bill when I make clear the Government's view.

Gregory Barker: I note the Minister's comments, and I will write to him with details of the Rother situation. However, I must say that the experience in the country is that the distribution of the grants is not fair and is not uniform. I am sure that the sum that the Minister quotes is correct, but the deep concern of people in the south-east is that the grants are not being equitably distributed.

Michael Meacher: The overall distribution of the revenue support grant raises a much wider issue. For years under successive Governments it has become a party political issue because there are allegations that one section of the population is being favoured over another. All Governments firmly, vigorously and, in the case of my Government, correctly, deny that that is the case.
 EPCS are important, but local authority waste management has also benefited substantially from the private finance initiative. Two hundred and twenty million pounds of private finance initiative credits was provided for in spending review 2000 for waste projects. That was increased to £355 million in spending review 2002; that is a 60 per cent. increase for the present review period. It is a substantial uplift in the provision of funding for major infrastructure projects. 
Mr. Sayeed rose—

Michael Meacher: I shall give way in a moment, but first I wish to complete the trio of goodies about which I am sure hon. Members will be delighted to hear. We have also provided additional funding, from which many of their local authorities gained, for 2002–03 through the waste minimisation and recycling challenge fund, which was ring-fenced and provided an additional £140 million.

Jonathan Sayeed: The figures that the Minister talks about are cash figures. Although I have no doubt that he is quoting them accurately, it would be convenient for the Committee if the Department could at some stage say what the real-term funding is and set that against the extra burdens that have been imposed on local authorities and have those costed as well. It would be interesting to know whether local authorities are worrying their constituent members and others unduly when they complain that the Government have underfunded the burdens that they have imposed. If the Minister is convinced of the rightness of his case, I hope that the Department can produce the figures that back up the real increases, vis-à-vis the extra burdens that have been imposed on local authorities. At a time of local elections no local authority introduces a
 massive hike in council taxes unless it has to; there must be a reason behind that.

Win Griffiths: Order. I remind hon. Members that interventions must be short.

Michael Meacher: I understand the hon. Gentleman's point. I do not have those figures to hand. I can give only the real-terms increase over the baseline 2000–01, up to the last financial year, which is a fairly short run. I do not know what the rate of inflation will be in the rest of the spending review 2002 period. One can measure that against extra functions, and the main one, which is a statutory recycling target, is the requirement to meet the mandatory performance standards on recycling, reuse, recovery and composting that the Government have laid down. We have provided an extra £140 million for that. In the light of that, many local authorities believe that they can meet those targets, whereas previously they did not. The hon. Gentleman can of course ask a parliamentary question to request similar information, but I shall try to provide him with information in due course.
 We are working with the Treasury to try to find a way to hypothecate the penalties laid out in the Bill back to waste disposal authorities. That would help to ensure that money is not lost to the local authority system as a result of the allowance scheme. We shall debate hypothecation later. 
 The amendment would also remove the provision that would enable regulations to provide for waste disposal authorities to be liable to a penalty when they failed to comply with a requirement to provide allocating authorities with the information that they required in relation to acquisition and disposal of allowances. That is necessary—the hon. Member for Lewes is right about this—to underpin the effectiveness of any trading scheme. The information is vital in order to ensure that the trading of allowances between waste disposal authorities and across scheme years is recorded and monitored. 
 I hope that I have persuaded most if not all hon. Members that although funding is an important issue on which it is virtually impossible to get total political agreement, the Government's case is nevertheless less sufficient in terms of what we have done. I hope that the hon. Member for South Holland and The Deepings can therefore withdraw his amendment.

John Hayes: I am conscious of the fact that there is a real difference of opinion among members of the Committee on the funding and resourcing of local authorities in general, and in particular on their responsibilities for waste and the new responsibilities—I hesitate to say new duties: I was going to say burdens, but I know that that is contentious—that they will have as a result of the Bill. I am inclined to share the views of my hon. Friends the Members for Bexhill and Battle and for Mid-Bedfordshire on the impositions on local authorities.
 I await the evidence from the series of parliamentary questions that the Minister has invited 
 my hon. Friend the Member for Mid-Bedfordshire to table, which will no doubt tease out the cumulative impact that I described of these things. However, the eloquence of the case put by the hon. Member for Lewes has strengthened my conviction that these are important matters. I did not intend to press the matter to a vote, but the hon. Gentleman has persuaded me to do so.

Norman Baker: I am grateful for the hon. Gentleman's comments, which are kind, as always. I gently suggest to him, however, that although I have sympathy with his broad point about the support for local authorities and the consequences of the Bill, the matter on which he seeks to divide the Committee is extremely narrow and the implications for local authorities are very small. He is therefore choosing the wrong place to press the matter to a vote.

John Hayes: Unlike the hon. Gentleman, my support for local authorities is whole and real. I do not qualify my support in the particular way in which he does. I am a robust advocate of local democracy and a sturdy defender of the interests of local government. The hon. Gentleman is rather more shaky on this issue, and perhaps more equivocal. I, however, do not share that equivocation, and it would be wrong of me to deceive members of the Committee into believing that I could. There are important new responsibilities. To be serious for a moment, of course we are not talking about a major additional burden—that would be a calumny. However, it is important to note that paragraph (h) states,
''to provide information in relation to their acquisition and disposal of allowances''.
 and that clause 11(2)(b) talks about maintaining registers. Clause 11(2)(e) talks about 
''evidence as to amounts of waste, or of waste of any description, sent to landfills'',
 and clause 12(1)(a) makes provision for maintaining prescribed records. Clause 12(1)(b) makes provision for gathering prescribed information, and clause 12(1)(c) provides for making prescribed returns. I could go on and on quoting clauses on the maintenance of records, the gathering of information, the keeping of information and the storage of information. Some of that information must be supplied in a form that can be inspected.

Gregory Barker: My hon. Friend further strengthens his case. I urge him to press the matter to a vote, because although it may not be a major issue in isolation, it is typical of the inconsistent imposition by the Government of yet more regulation, which comes unfunded and without resource, and which, ultimately, is a form of stealth taxation on local council tax payers.

John Hayes: I see a Tory split emerging. Some members of the Committee are urging me to press the matter to a vote, while others are more reticent. All hon. Members, certainly in the Opposition, are wholly committed to the case for local democracy as I described it, but clearly there are differences of nuance.

Jonathan Sayeed: I suggest that my hon. Friend reserves his big guns for the big questions. This issue is very useful for teasing out a general concept. The Minister
 has been good enough to agree, as far as possible, to draw a comparison between real funding increases and new duties imposed, and on that basis, I urge my hon. Friend not to press this particular matter to a vote.

John Hayes: I am on the horns of a dilemma: I must choose between my hon. Friends the sedate Member for Mid-Bedfordshire or the fiery young blood from Bexhill and Battle. On balance, I think that my hon. Friend the Member for Mid-Bedfordshire is right. However, it is important that we are clear that this will be real additional work and that we know whether an additional person will be employed to do it or whether someone who is already employed will be allocating a proportion of their time to it.
 A cursory examination of the responsibilities is not enough. Some of the information must be kept in a form that can be presented and inspected; copies of records must be produced, and the whole process must be audited. It would be inappropriate for local authorities not to allocate sensible resources to that. They could allocate a member of staff or they could employ someone to do the job, and that has a cost. It is not unreasonable for that cost to be met. 
 Given the Minister's comments and because I do not wish to embarrass the hon. Member for Lewes more than he has already been embarrassed, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 7 ordered to stand part of the Bill.

Clause 8 - Offences under regulations under

Bill Wiggin: I beg to move amendment No. 40, in
clause 8, page 6, leave out lines 23 and 24.

Win Griffiths: With this it will be convenient to discuss the following amendments:
 No. 46, in 
clause 8, page 6, line 26, leave out from 'amount' to 'or' in line 27 and insert 
 'which may be set by the Secretary of State by statutory instrument.'.
 No. 41, in 
clause 8, page 6, leave out line 29.
 No. 42, in 
clause 8, page 6, leave out lines 33 and 34.
 No. 43, in 
clause 8, page 6, leave out line 39.
 No. 44, in 
clause 8, page 6, leave out lines 42 and 43.
 No. 45, in 
clause 8, page 6, leave out line 45.

Bill Wiggin: The reason for the amendment is that it touches on the very serious nature of some of the offences in clause 8 and on the response to them. I was of the opinion that the Bill was all about filling holes in the ground rather than filling cells. Therefore I am
 unhappy with the idea that councillors or employees of a council should face up to three months in prison for committing an offence under the regulations in clauses 6 and 7 or for failing to comply with them.
 Clause 6—''Borrowing and banking of landfill allowances''—and clause 7—''Trading and other transfer of landfill allowances''—deal with offences for which we should not be considering imprisonment. There is a fantastic painting behind you, Mr. Griffiths, of at least five Members of Parliament fleeing the wrath of the King. That is the sort of thing for which we should consider imprisonment. Consider the possibility of a similar painting in 100 years' time of four or five Liberal Democrat councillors from Herefordshire unitary authority fleeing because of an offence that they committed in failing to comply with the landfill tax credit scheme or the trading and transfer of landfill allowances or even the borrowing and banking of landfill allowances. 
 This is a serious Bill and it is incumbent on all of us to improve it. I have done so by tabling the amendments. I would happily imprison people for serious offences, but this is not the sort of message that the Committee should be sending out. That is why I tabled the amendments. We must enact positive, helpful, clear and sensible legislation. The Opposition have a duty to question the motives of a Minister who seeks to imprison people for such offences. What sort of person would the Minister seek to imprison under the regulations? I began to picture, almost like a Radio 4 show, who would be imprisoned. Would that be the whole authority? If so, that might make the Bill considerably more popular. It would be a Paul Merton-type answer that if it put loads of councillors in prison, it could not necessarily be a bad thing. 
 However, we should consider the problem that the Government have had with parish councillors. It has been difficult to find parish councillors as they feel that what they are allowed—[Interruption.] No, they are put off by the £25 limit on the presents that they can receive without declaring them, which puts some of their Christmas out of reach. Considering how difficult it is to find parish councillors, it is no surprise to find out how difficult it is to find county or unitary authority councillors. I know that that is true, because we have council elections in May, and the Labour party and Liberal Democrats have struggled to find enough candidates in my area. The idea that we will put them in prison for failing to comply with the Waste and Emissions Trading Bill is extraordinary. Given the nature of the Bill and of the people whom I understand would be imprisoned, community service would perhaps be a more appropriate punishment. 
 When the Minister replies, I hope that he will calm my fears about who will be imprisoned and outline the type of person whom he feels it would be appropriate to imprison. It is entirely reasonable to demand fines, but it is bizarre to wish to lock up people. We will debate hypothecating fines under a later clause, and that must be a better way of dealing with such an offence than worrying about prison sentences. I hope that the Minister will answer some of the probing questions and that the Committee will accept that the amendment would make the Bill less draconian.

Win Griffiths: I am sure that Prynne, Bastwick, Valentine, Holles and Burton will be posthumously happy of the mention that they had.

Jonathan Sayeed: The amendments would strike out the regulations that provide for an offence under the Bill to be punishable by imprisonment. That leaves fining as the only penalty. I examined the fines in the Criminal Justice Act 1991, section 17(2) of which showed that the maximum fine on the standard scale for a level 5 offence is £5,000. My question is slightly different from those in the contribution of my hon. Friend the Member for Leominster (Mr. Wiggin). If the cost of non-compliance is less than the cost of compliance, will that not encourage authorities not to comply? Should there not be a greater degree of flexibility that both allows for inflation and ensures that the penalty for not complying is greater than the imposition for complying? That would mean that fewer fines would be charged because people would comply.

Norman Baker: The hon. Gentleman's last point is valid, and he will see that amendments have been tabled on that important theme. A calculation has to be made, and the Minister may recall that I made that general point about the costs of compliance versus non-compliance on Second Reading.
 I have some sympathy for the points made by the hon. Member for Leominster about the length of the prison sentences and whether imprisonment is an appropriate sanction. The Government have presided over a massive increase in the prison population, and we now have more than 70,000 people in prison in this country, which is up from about 42,000 in 1990. It is the second largest prison population per head of population in Europe. Successive Home Secretaries, both Labour and Conservative, have indicated that they wish to prevent minor offences from resulting in prison sentences. There is considerable evidence from the criminal justice system that short prison sentences do not work; they are counter-productive and clog up the system. If we put somebody in prison, it should be for a serious offence—perhaps one attracting a sentence of four years or more. It does not seem to be sensible to put somebody in prison for three months—which means six weeks with good behaviour—for an offence under this clause. It is important that the individual responsible for any activity that is illegal under these clauses be held personally responsible. It is not sufficient for an individual knowingly to commit an offence and for the waste disposal authority to pick up the fine and to be held responsible. If an individual commits an offence, that individual should be held responsible. 
 Can the Minister clarify how the fine regime will be applied? Will it apply to the individual responsible, or is the fine going to be levied against the waste disposal authority? Employees will be less concerned about the consequences of their actions if the authority is picking up the bill. Could the Minister also set out what sort of offences he anticipates will result in the maximum two years' imprisonment, referred to in subsection (6)? It is important that there be individual responsibility, but it is also important that we do not send people to prison for minor offences.

Michael Meacher: I recognise the concerns that have been expressed. We do not wish the penalties to be more draconian than is necessary to achieve compliance. As in all such circumstances, we hope that the penalties will not have to be used.
 I very much agree with the hon. Member for Mid-Bedfordshire. The penalty for non-compliance must exceed the cost of compliance if we are to tilt the market in order to ensure that compliance occurs naturally. That will come up later, as the hon. Member for Lewes said. 
 As the Bill is implementing an EC obligation, the maximum penalty provided for in clause 8 reflects those that are permitted under the European Communities Act 1972, which are the maximum that regulations could provide for offences. In England, it will be for the Secretary of State to provide in regulations the level of penalties that will be applied to any offence created under clauses 6 and 7, depending on the nature of the offence. The hon. Member for Lewes asked about the types of offence, and I shall come to that. One example of the type of offence that might be created under the Bill would be the offence of knowingly or recklessly providing false or misleading information to the monitoring authority. That is a serious offence if an individual gains financially, or if there is a political gain. The creation of offences will be subject to consultation. 
 There are precedents in other legislation for that type of offence to be punishable by imprisonment for a term not exceeding two years or by a fine or by both, although that is not to say that we are going to utilise those penalties. However, there is precedent in the 1972 Act. I hope that hon. Members will agree that in extreme cases such offences could be serious.

John Hayes: The Minister is making a compelling case to the effect that it would be an exceptional circumstance, but he has not been clear about who would be liable. Would it be the councillor, the chairman of the committee, the whole council or the officer responsible for maintaining the records? Clarity on such matters is most important.

Michael Meacher: The hon. Member for Leominster raised that point with some facetiousness.

Jonathan Sayeed: Humour.

Michael Meacher: Well, I noticed that he said it with a great smile on his face. [Interruption.] No, it is a serious point. The answer is that everything would depend on exactly what the felony was and who was directly responsible—whether it was councillors, the chair of the committee, the leader of the council or officials, for example.

Gregory Barker: Would I not be right in thinking that if an official or a councillor willingly manipulated information for financial gain, that would already be covered by criminal law under fraud or a similar offence? We are really talking about political advantage. I wonder whether that sets a worrying precedent, especially for the current Administration.

Michael Meacher: I shall sidestep the not very telling point that the hon. Gentleman made at the end of his
 intervention. On the substantive question of whether the matter is already covered by legislation, any official or councillor who acts corruptly is of course subject to legislation and proper penalties. However, the Bill introduces new administrative provisions that will not automatically be covered by existing legislation. If one requires councillors or officials to act in a particular way, it is important to attach penalties to those new requirements. That is the purpose of the provision.

Jonathan Sayeed: I understand that there need to be penalties; the question is whether imprisonment needs be a part of that penalty, which is the thrust of the amendment. Although I am not aware of it, there may be a precedent in similar but not exactly the same circumstances. Could the Minister tell us whether there is such a precedent? If there is already a precedent that has worked well, there might be no need to press the amendment to a vote, at least as far as I am concerned.

Michael Meacher: My understanding is that there is a precedent. I cannot quote it, but the means to do so might shortly be made available to me. I believe that the situation is not unique and not without precedent. I entirely agree with the hon. Gentleman that although there is no doubt that a penalty is necessary, the question is whether that should include imprisonment. That is a matter of judgment, but we have said that the question of penalties will be subject to consultation. We do not say that a person who knowingly or recklessly provides false or misleading information will automatically be subject to imprisonment, although we do not wish to exclude that possibility. It is probably best to leave the matter to later consultation.

John Hayes: The Minister has made a valuable point. I shall give him a little time to consider his precedent, but it is important that he has given the Committee an assurance. The fact that the issue is not automatic and will be subject to consultation is important and should be amplified. The Minister sees imprisonment coming up in exceptional circumstances and he leaves it available as a long-stop. That is different from our sending a signal to councillors and councils that as soon as the Bill becomes law they are likely to be banged up if they get some of their returns wrong, which will be complicated, new and confusing. The Minister has been helpful on the issues of balance about how the provisions will be applied.

Michael Meacher: I am very glad to say that under the normal provision of service here I can supply some evidence of where similar penalties have a precedent. One is the Competition Act 1998, section 44(1)(a), which says:
''If information is provided by a person to the Director in connection with any function of the Director under this Part, that person is guilty of an offence if the information is false or misleading in a material particular, and he knows that it is or is reckless as to whether it is.''
 Section 44(3)(b) states: 
''A person guilty of an offence under this section is liable on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both.''
 There are similar provisions, which I shall not read out, in the Financial Services and Markets Act 2000, in 
 chapter 41 of the Fair Trading Act 1973 and in the Charities Act 1993.

Bill Wiggin: Does the Minister accept that the Competition Act 1998, the Financial Services and Markets Act 2000, the Fair Trading Act 1973 and the Charities Act 1993 all concern money? In those cases it is essential that there should be proper penalties. The Bill concerns landfill, which is a totally different subject.

Michael Meacher: No; no. The hon. Gentleman is being a little vehement. Of course those Acts concern money, but we are talking about knowingly or recklessly providing false or misleading information to the monitoring authority. [Interruption.] Hold on and give me a chance to speak. The result of providing false information in target years could be the failure of the allocating authority, which is in effect the Secretary of State, to achieve the targets set down in the EU landfill directive. That would be an extreme case, but unless we have accurate information to provide to the Commission as evidence that we have properly fulfilled our requirements, this country could be in considerable difficulty. The penalties for the whole country in that case would be vastly greater than the relatively small gains that might be made under those previous Acts.
 I have been informed that all the precedents relate to trading. The offences in sections 6 and 7 of the Competition Act 1998 also concern trading, so there is a direct precedent.

Jonathan Sayeed: I did not understand the Minister's point about trading. Perhaps he can further elucidate it in a moment. The examples that he adduced as setting a precedent concern personal pecuniary gain. The 1998 Act does not concern personal pecuniary gain; it concerns someone getting themselves out of a hole. In that case, someone would have done something wrong, but they would not be making money out of it. In each of the examples that the Minister gave, people were acting in their personal financial interest. My question was whether there was a precedent in local government.

Michael Meacher: My examples show that there is a precedent in local government. However, one can envisage circumstances in which an individual gains financially or politically. That is the basis on which the possibility of a custodial offence should not be excluded.
 I am increasingly warming to the measured responses from the hon. Member for South Holland and The Deepings. I do not want to damage his reputation or to discourage him from continuing with his course, but it is right to look at the consultative proposals rather than assuming that every official who provides incorrect information will be banged up for three months. There is no intention to do so.

Gregory Barker: In respect of custodial sentences on miscreants, to what extent does the Minister expect the time-honoured principle of ministerial responsibility to extend down the chain of command?

Michael Meacher: If the hon. Gentleman is suggesting that Ministers are not subject to the same kind of
 penalties as they recommend for others, he is quite wrong. [Interruption.] Does the hon. Member for Leominster want to intervene, or is he just making a facetious point? He is.
 As I have said, the penalties in clause 8 also relate to clauses 6 and 7, the trading provisions, but the offences under the Bill also include being in breach of the licensing conditions. They do not relate purely to clauses 6 and 7. There was debate on the penalties for these criminal offences in another place and the Select Committee on Delegated Powers and Regulatory Reform issued two reports. The Government tabled amendments to bring the Bill into line with those reports' findings and the Select Committee agreed that the delegation to create offences with these maximum penalties was acceptable. I therefore believe that further changes are unnecessary. I hope that hon. Members will accept that the further amendments are unnecessary, given that there are precedents and there will be consultation before penalties for particular offences are finally fixed, and bearing in mind that the matter was exhaustively examined by their lordships and by the very thorough Select Committee, and that the Government were prepared to accommodate its requirements.

Bill Wiggin: I have a question for the Minister. He keeps referring to consultation, but surely it is our role to be consulted, as a Committee, on the Bill's wording. If we now find that the Bill's fines and penalties are to be re-evaluated and consulted on again, we are not really in a position to do our job properly today. Is that wrong?

Michael Meacher: I think that it puts things in a misleading fashion. We are talking about framework provisions, which have to be agreed and are subject to cross-examination and investigation by this Committee. The Government are accountable for that. However, we have not at this stage consulted on the precise application of the Bill's framework provisions. It will be for hon. Members and any other stakeholders—to use a rather ugly word—who wish to, to comment on them then. It may well be that we can return to that later, although probably not during the passage of the Bill. The matter will come before the House again and if the Opposition feel strongly enough, they can then force a debate.

Norman Baker: For the sake of clarity and completeness, will the Minister confirm that any fines applied pursuant to this clause will be applied to individuals and not, in any circumstances, to a waste disposal authority?

Michael Meacher: I can confirm that that is so.
 Having answered all the other points, I repeat that I hope that the hon. Member for Leominster is persuaded that we have taken full account of, and met, some of the objections made, and that he will not press his amendment.

Bill Wiggin: First, I apologise to the Committee if I was facetious in my opening comments. I felt that the point was extremely serious but that it would do no
 harm to show that both sides were prepared to debate the matter fully.
 Amendment No. 46 would have dealt with the question of the size of the fine, and would have been helpful. However, the majority of the amendments cover the length of sentencing. I do not agree that the Minister was especially helpful or clear in defining the difference between a three-month and a two-year sentence. He did not really describe the type of person that he thought might receive such prison sentences. However, he gave us good precedents from the Competition Act 1998, the Financial Services and Markets Act 2000, the Fair Trading Act 1986 and the Charities Act 1993, although I was grateful to him for taking my intervention as I still believe that in respect of that legislation, the purpose of the prison sentence is to prevent corruption for personal gain. It is likely that in respect of this measure, any corruption will be less obvious; therefore it will be more difficult for a court to decide, in what will be a complicated case, who is guilty of corruption. The Minister has done a valiant job defending his Bill but considering the titles of clauses 6 and 7, I am not completely happy that he has answered all my questions. However, it would be wise to return to the matter on Report, especially as consultation has been mentioned. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 8 ordered to stand part of the Bill.

Clause 9 - Duty not to exceed allowances

John Hayes: I beg to move amendment No. 48, in
clause 9, page 7, line 7, at end add 
 'Waste disposal authorities are the responsibility of the allocating authority and any penalty must be specific to the offending waste disposal authority only'.

Win Griffiths: With this it will be convenient to discuss the following amendments:
 No. 49, in 
clause 9, page 7, line 9, leave out 'penalty' and insert 'financial penalty.'.
 No. 3, in 
clause 9, page 7, line 27, at end insert— 
 '( ) All monies in respect of financial penalties collected under this section shall be hypothecated directly to waste disposal authorities as directed by the allocating authority.'.
 No. 12, in 
clause 9, page 7, line 27, at end insert— 
 '( ) Any penalty, including supplementary penalty, shall in total be of a level which would exceed that which would have been spent by the waste disposal authority to meet the target.'.
 No. 50, in 
clause 9, page 7, line 36, at end add— 
 '( ) All monies collected from financial penalties under this section will be hypothecated directly to waste disposal authorities as directed by the allocating authority.'.
 No. 13, in 
clause 10, page 8, line 9, leave out 'may' and insert 'is thought likely to'.

John Hayes: The amendments return to the issue of moneys, fines, penalties and hypothecation, which has already been mentioned, but it is important to consider where the money that is collected might end up. Anxiety has been expressed that because of the process by which it is collected, money from fines might not find its way back into the system in a form that would help to ease the financial burden that I mentioned earlier. We can debate the scale and size of the burden, but whatever size it may be, it should be dealt with from the money collected in fines. That is the hypothecation issue, which is dealt with in amendment No. 50 in my name and that of my hon. Friend the Member for Leominster, and in amendment No. 3, which will no doubt be discussed at length by the hon. Member for Lewes, who said that he decided on it when he was on a train journey. He will probably claim that it was entirely of his own making, although the Conservatives had already decided to support the principle of hypothecation before he invented it on his journey.
 It is important for the Committee to debate hypothecation and refunding through local authorities. It is a right and appropriate way to allocate the moneys; we would bitterly resent those moneys being collected and taken away from local government altogether, as there is no guarantee that the money will find its way back to local government, let alone to a particular local authority. The money should find its way specifically back into the process that we are discussing in the Bill, which we support as a matter of principle. 
 The amendments refer to the level of a penalty not exceeding the amount that the local authority would have spent in order to meet the targets, as the Minister mentioned briefly in a previous debate. It is entirely appropriate that the penalty should be in keeping with the costs associated with the targets. If the penalty were out of tune and disproportionate it would send entirely the wrong message to local authorities and would undermine the sense that this is a fair and reasonable provision. The amendment concerns both that and hypothecation. 
 It may be worth saying at this stage that there is no disagreement about penalties per se. The Bill should be supported by the right sort of penalty and fine. Our debate on the previous group of amendments was not about a decision that the Opposition had taken in principle that fines or penalties were not a good idea; it was about the scale and nature of those penalties. I welcome the comment by my hon. Friend the Member for Leominster that that was a matter to which we might return. I do not want to cover old ground, but that should be put on the record. We are in favour of penalties, but they must be appropriate. 
 In addition, the amendments talk about the penalty being specific. It is not simply a matter of ensuring that the money is paid back, or of the level of the fine, but of the targeting of that penalty. We must target the penalty at the waste disposal authority that has committed a specific act and has acted in breach of the requirements of the Bill and the spirit and the principle that lies behind it. The penalty must be 
 targeted at that waste disposal authority in a particular and specific way. 
 That is the strength of the amendments. They are important not just in themselves but because once again—I make no apologies for repeating this—they send an important signal to local authorities. No local authority will mind taking on responsibilities that are properly funded, clear, precise and based on good principle and where the associated penalties are seen to be fair, reasonable, proportionate and targeted and there is a sense in which they have a good purpose. Paying back the local authority to help it support the function would be a good purpose. 
 Good purpose is a principle that will underlie the Bill, particularly its financial aspects, and should inform the collaborative, partnership approach that the Opposition have consistently advocated. In summary, that is precisely what the amendments do. I do not see them as particularly contentious. I anticipate that the Minister will grasp them with both hands as in my judgment they would considerably improve the Bill.

Norman Baker: I do not regard the amendments as contentious either, but I am not sure that I share the hon. Gentleman's optimism that the Minister will grab them with both hands and incorporate them in the Bill. Time will tell. We shall find out shortly. I shall deal with the amendments as they are set out in the group. Amendment No. 48 ensures that
''Waste disposal authorities are the responsibility of the allocating authority and any penalty must be specific to the offending waste disposal authority only''.
 That is common sense. No one could possibly object to that principle. Although it is not spelled out in the Bill, I am sure that it must be the Government's intention. I cannot think that they intend anything else. That is therefore uncontroversial and sensible and should be incorporated in the Bill. 
 Similarly, amendment No. 49 qualifies ''penalty'' with ''financial''. Perhaps we take it for granted that penalties are financial but it does no harm to ensure that that is the case. That is equally uncontentious. I am happy to tell the hon. Member for South Holland and The Deepings that amendment No. 3, which stands in my name and that of my hon. Friend the Member for Guildford, replicates an amendment tabled by his Conservative colleagues in the House of Lords. It was not drawn up by me on the train, although the other one was. I was delighted to see that amendment tabled in the House of Lords under the Conservative banner, not least because hypothecation has long been a Liberal Democrat concept. I welcome the fact that its influence is spreading to the Conservative Benches. 
 It is absolutely right that hypothecation should play a role in the Bill, in wider environmental legislation and, indeed, in legislation generally. In that respect, it seems to work well in certain areas—in relation to speed cameras, for example. I hope that the Government will consider using it more widely, because it has public support.

John Hayes: I do not want to be pedantic, nor do I want the hon. Gentleman to say something that he
 could not robustly defend. It would not be fair to say that hypothecation was a Liberal Democrat concept. Liberal Democrats may frequently refer to it or draw on it in forming policy, but I would not say that it was a Liberal Democrat concept, and I would not want the hon. Gentleman to say something inaccurate.

Norman Baker: Well, if the hon. Gentleman was trying not to be pedantic, he set about proving the point in a peculiar way. Applying the words ''Liberal Democrat'' to a concept could imply that it originated with us or that it belonged to us. The concept of hypothecation certainly belongs to us, so the hon. Gentleman's point is not valid.
 To return to amendment No. 3, it is absolutely right that all moneys raised by means of financial penalties should be returned to waste disposal authorities. After all, disposal authorities and, indeed, collection authorities will be asked to spend a great deal to meet what, by the Government's own admission, are onerous targets. That will require a good deal of investment, and it would be unfortunate if a waste disposal authority that failed to meet a Government target despite having tried its best were subject to penalties. It would then be less able to meet its future targets, because it would have paid a fine to the Treasury and would have less money. That cannot be what the Government intend. 
 It is right in principle to use incentives and disincentives to drive waste disposal authorities in the right direction, but it cannot be sensible to create a vicious circle. If moneys are progressively withdrawn from disposal authorities that cannot meet their targets, they will have less money to meet future targets, and fines will pile up. That cannot be what the Government intend, and there must be a way out of that situation. Hypothecation, which would circulate money back to waste disposal authorities—not necessarily to the offending authority, but to authorities in general—would be a sensible way of proceeding. I honestly cannot see any objection to that, although the Minister will doubtless come up with something. 
 Amendment No. 12 is also in my name and that of my hon. Friend the Member for Guildford. It raises an important point to which I referred on Second Reading and to which the hon. Member for South Holland and The Deepings and the Minister have also referred. The amendment states: 
''Any penalty, including supplementary penalty, shall in total be of a level which would exceed that which would have been spent by the waste disposal authority to meet the target.''
 That is a terribly important principle. If it is not in place, an authority may calculate that the best method of proceeding is to incur a penalty. It may say, ''All things considered, that's the cheapest option. We will incur the penalty.'' That cannot be sensible, because it encourages the disposal authority to break the law or—that is perhaps a bit strong—to incur penalties. That is the opposite of what the Minister wants. The amendment therefore seems sensible, and I noticed that the Minister was nodding sagely while I discussed it. I hope that that means that he is sympathetic to it.

Gregory Barker: The hon. Gentleman makes a sensible point, although I do not think that such decisions will be made in the casual way that he implied. Local authorities that have had an iniquitous grant from central grant will conceivably have to decide whether to fund social services, services for old people or special schools. In drawing up a list of political priorities, they may be forced—against their better will and better judgment—to go down the route that the hon. Gentleman described. That may be cheaper and better, and it may enable them to fund other social responsibilities.

Norman Baker: I agree. The hon. Gentleman describes a real scenario. I do not want to go off at too much of a tangent, but it is worth noting that the average council tax rise this year is 9 to 10 per cent.—those are the Government's figures, which they provided in a written statement last week. We have had horrendous rises in East Sussex, as the hon. Gentleman will know. In fact, I have an Adjournment debate on that very subject on Friday, in case he happens to be in the Chamber.
 Local authorities will be squeezed, notwithstanding the extra funding. We have a conundrum because we are told that local authorities are given huge amounts of extra money and yet every single authority—Labour, Liberal Democrat or Conservative—has introduced huge rises in council tax. That is an extraordinary situation, which cannot be explained by the Government's figures. There is, undoubtedly, financial pressure on local authorities. 
 Local authorities will, undoubtedly, consider what is in the best interests of their electorate and, undoubtedly, weigh up their responsibility in relation to waste along with their responsibilities for social services, education and all the other matters with which they must deal. They will calculate how best to proceed on that basis, and if they conclude that they are short of money, as they probably will be, and that there is a way out that will cost them less money, they may well take it. That is why I believe that, in the interests of the environment, this particular avenue must be shut off, but we must also ensure—this is the quid pro quo—that local authorities have the necessary resources to enable them to discharge their duties. I am not convinced that they always have that money. 
 Amendment No. 50 is an alternative version of amendment No. 3, so there is little difference between the Liberal Democrats and the Conservatives on that matter. 
 Amendment No. 13 stands in my name and that of my hon. Friend the Member for Guildford. Yesterday, I raised a query with the Clerk because it seemed slightly odd to include the amendment in this group, first because it relates to clause 10 and, secondly, because it seems to have little to do with the matter before us. However, as it has been included in this group, I shall briefly speak to it. Amendment No. 13 raises a linguistic point, because I want to be sure that I understand the Government's intentions. 
 The provision relates to the circumstances in which a monitoring authority from an area will deal with a waste disposal authority's performance. Clause 10(2)(e) states: 
''The monitoring authority for an area shall . . .
comply with any directions by the allocating authority . . . where it appears to the allocating authority or the monitoring authority that a waste disposal authority in the area is or may be liable to a penalty''.
 It is a small point, but I am just trying to establish whether ''may be'' relates to present or future circumstances, because it seems to me that it is open to both interpretations. It might be a small linguistic point but its implication is important. If ''may be'' relates to a potential future event, it allows the monitoring authority—the Environment Agency or whoever it happens to be—to second-guess the activities of a waste disposal authority, anticipate what it might do and take action on the basis of what it thinks might happen, rather than on the basis of what is actually happening. That situation would be worrying. 
 The monitoring authority cannot be allowed to anticipate what a waste disposal authority will do and then say, ''You are going to do this, so we are going to take action.'' That would be terrible. The monitoring authority must wait for the circumstances to arise and, then, if it is unhappy, the provisions in the clause will kick in, but they must be present, not future, circumstances. We must ensure that a present power, not a future power, is given to the monitoring authority. 
 That is why we have suggested that, to clarify the provision, the words ''may be'' should be removed and replaced with ''is thought likely to'', so that the clause would read, ''is thought likely to be liable'', which would relate to present circumstances. I hope that the Minister understands that linguistic point. We must limit the monitoring authority to what is happening now, rather than allow it to take action on the basis of what it thinks might happen in future. That might be the Government's intention, but the clause is open to a dozen interpretations. 
 With that comment, I profess my support not only for the amendments tabled by the Liberal Democrats but for those tabled by the Conservatives. I shall be interested in the Minister's response, but the question of hypothecation is important. Unless the Minister is able to satisfy me on that, I should like to ask for a second vote on amendment No. 3.

Jonathan Sayeed: At the moment, I am reading a book about the genesis and development of the English dictionary, which is fascinating. Sam Johnson was so celebrated because he drew on the examples of the use of words over a 150-year period in order to explain what they meant. We must leave it to a latter-day Sam Johnson to decide what ''hypothecation'' means and who used it first. However, it is clear that removing money from a local authority by means of a penalty to fill the Chancellor's back pocket would not be attractive to any member of the Committee.
 We had a canter round this course previously. I shall make the same points now as I did then, although 
 first I should like clarification from you, Mr. Griffiths. Is amendment No. 47 not in this group because, even though it relates to clause 9, the principle was discussed earlier, or was it struck out for another reason?

Win Griffiths: That amendment was debated earlier, with amendment No. 30.

Jonathan Sayeed: Thank you for that clarification, Mr. Griffiths. I shall be fairly brief. I agreed before with the Minister that it was sensible for penalties to be specific to the offending waste disposal authority only. However, I said then, and I continue to say, that I am uncomfortable with the relationship between the waste disposal and waste collection authorities.
 I accept that Government amendments Nos. 21 and 20 require a waste disposal authority to consult the waste collection authority in directing the collection of separated waste, but let me give an example that I gave previously. Particularly when two authorities are of differing political persuasions and an election is close—the cost of collection and disposal will be germane to their budget setting—there could be conflict, and however much consultation there is, they may not reach an answer. The collection authority could frustrate the activities of the disposal authority, or the disposal authority could impose on the collection authority a highly onerous collection system that was different from what was practised previously. Unless both authorities can operate together in a much clearer way, even when they would otherwise be in conflict, the Bill will contain a fairly obvious cause for concern. 
 Yes, the penalties should be on the waste disposal authority. We hope that that authority will work co-operatively with the waste collection authority, but there can be problems. The imposition of penalties could give rise to similar problems, in that, although they may be imposed on the disposal authority, it would not necessarily be able to succeed in a passing-off action on to the collection authority. 
 The Minister conceded that the cost of compliance should be less than the cost of the penalty. That makes sense to everyone, but is not clear in the clause. Finally, I return to my point about hypothecation, which I made previously. If money is taken out of a waste collection and disposal system that is already creaking and under pressure in order to fill the £30 billion or £40 billion hole in the Chancellor's pocket, that will be a mistake and bitterly resented. That money should be hypothecated; it should go back to local authorities. I hope that no money will go back to local authorities because everyone will behave themselves. However, any piece of legislation must allow for things to go wrong, and I do not believe that the Bill deals adequately with the relationship between the disposal and collection authority. I look to the Minister to stiffen up this part of the Bill.

Michael Meacher: This is an interesting debate. The hon. Member for Mid-Bedfordshire spoke about the issue of hypothecation, whatever it means, and the hon. Member for Lewes spoke about whoever originated the concept—I do not know the answer.
 Hypothecation is, however, an important issue, and is also a sensitive one for the Government. The Treasury is responsible for collection of revenues, but the decision on their allocation is made by the Cabinet. Hypothecation, which is an exception to that, will be carefully prescribed. I will speak further about that matter later. 
 I believe amendments Nos. 48, 49 and 13 to be unnecessary, and I do not entirely understand the intentions behind them. 
 Amendment No. 48 seeks to ensure that any penalty is specific to the waste disposal authority concerned. Only a waste disposal authority that has failed to carry out its duty under clause 9(1) to landfill within its allowances will be liable to a penalty. Waste disposal authorities will not incur penalties due to the failure of other waste disposal authorities to comply with their duties. Once a waste disposal authority has exceeded its allowances, it will automatically be liable to a penalty. The level of the penalty will be determined in accordance with regulations, and those may provide for a fixed penalty or a formula for calculating a penalty. 
 I should add that the same penalty or formula will apply to each authority—there will be no discrimination—but an allocating authority has the power to relieve liability to a penalty, or to extend the time for payment. I believe that to be a sensible fall-back position, which may occasionally have to be used. 
 Amendment No. 49 would remove the word ''penalty'' from clause 9(2) and replace it with the words ''financial penalty''. However, it is already clear from the provisions of clause 26 that the penalties are financial, so the amendment is not necessary. 
 Amendment No. 13 would require the monitoring authority to notify the allocating authority only where it considers that it is likely that a waste disposal authority is liable to a penalty. That is the ''may be'' point raised by the hon. Member for Lewes. The monitoring authority must notify the allocating authority where the waste disposal authority may be liable to a penalty. That is a present circumstance, and is not intended to entrap a waste disposal authority in some future unpredicted circumstances.

Norman Baker: I am glad that that is the Minister's intention, but does he not allow that the verb ''may'' has a future purpose as well as a present one, and that therefore the use of the word ''may'' is open to subsequent misinterpretation?

Michael Meacher: That is not the legal advice that I have received, but I am prepared to examine the issue further, perhaps in the period before this afternoon's sitting. If there is any dubiety or ambiguity, I will return to the point.
 Amendment No. 13 refers to a monitoring authority having to notify the allocating authority where it considers that it is likely that a waste disposal authority is liable to a penalty. That would mean that allocating authorities might not receive information 
 about a waste disposal authority that might be liable for a penalty until it was too late to do anything about it. An allocating authority would need information of that kind as early as possible, so that it could investigate and require the necessary information from the waste disposal authority, and perhaps help that authority to avoid the penalty altogether. 
 Amendment No. 12 would add a new subsection to clause 9 requiring any penalty, including any supplementary penalty, to be higher in total than the amount that the WDA would have to spend to meet its targets. I believe that there is general agreement on that throughout the Committee and the matter was raised on Second Reading and in the Committee by the hon. Members for Lewes and for Mid-Bedfordshire. Obviously, it is imperative for the whole trading system that penalties are sufficiently high to make it more unattractive for WDAs to opt to take a penalty than to put in place the required changes to meet its targets; otherwise, the whole landfill allowance market will collapse. 
 We are well aware of the issue, and the level of penalties will be subject to consultation. We will work with economists to ensure that the final level of penalties is appropriate, but, having given a commitment that that is the principle by which they will be determined, I do not think that it is necessary to make changes to the Bill. 
 Amendments Nos. 3 and 50 address hypothecation of penalties back to WDAs, which, as all hon. Members have said, is important. Indeed, the hypothecation of resources—perhaps we should say recycling of resources, although that may be ambiguous in the context of the Bill—came up several times in another place. The amendments would require penalties imposed on those authorities that fail to landfill within their allowances to be redistributed to WDAs as directed by, in the case of England, the Secretary of State. 
 I am wholly sympathetic to the purpose of the amendments. Penalties are vital as a means of providing adequate incentives to act in a certain way, but it is important that they do not place a destructive drain on the resources available to the waste disposal system. Several hon. Members made that point and I entirely agree with them. Some sort of hypothecation arrangement along the lines suggested in the amendment would clearly be beneficial, but that is probably the nearest that I can get to the wish of the hon. Member for South Holland and The Deepings for me to embrace and grasp the amendments with enthusiasm, because there is a caveat. 
 It is equally important that the framework for transferring resources from penalties back into the waste management system is thoroughly thought through. Transgressing authorities should not benefit, or receive an uncovenanted gain, from their own offence, and we must have a system that ensures that that does not happen. Discussions are taking place with a view to reaching an acceptable and workable solution. It is important that transgressing authorities continue to be penalised.

Jonathan Sayeed: Perhaps I can assist the Minister. He likes the idea of hypothecation and of money staying within the system. It is within his power to support amendment No. 3 or amendment No. 50 and to return with a better amendment on Report.

Michael Meacher: Yes, I understand that, but my point is that I am unwilling to commit myself to specific details on hypothecation given the sensitivity of the discussions within the Government. If the amendment were pressed, and I hope that it will not be, I would be in the unhappy position of having to resist it because of the state of negotiations within the Government, and that would suggest that I am opposed to it, which I am not. I am simply asking the Committee to trust that the Government are serious about the matter. I am not trying to make a point to save a vote. We have already accepted that any increase in the landfill tax over and above the present escalator increase will be recycled to local authorities and businesses. That important precedent shows that we are committed to the principle.
Several hon. Members rose—

Michael Meacher: Three hon. Members wish to intervene. I give way first to my opposite number.

John Hayes: I am flattered that the Minister should choose to give way first to me. We are now focusing on the most important issue arising from this group of amendments; it is also a matter of financial significance. The Minister said that he is in sensitive negotiations, and one understands that Governments are, as he said, always in difficulty over hypothecation.
 I put it to the Minister that one could interpret the matter rather differently. He could go back to those negotiations inspired by the fact that the Committee feels strongly about the matter. He might want to say to his colleagues in the Government that, despite an agreeable discourse, the Committee thought the matter so important that it needed to press the amendment to a Division. 
 It is not for me to second-guess the hon. Member for Lewes, but my slightly preferable amendment No. 50—it is a rather finer and better-honed version of the hon. Gentleman's amendment No. 3—might assist the Minister in those negotiations.

Michael Meacher: I appreciate the hon. Gentleman's solicitude in trying to stiffen my resolve in further discussions. As I said, we are looking at a number of options for achieving what we want; but hypothecation would not necessarily require an amendment to the Bill. For that reason, I am reluctant to accept any amendment.

Gregory Barker: On the last point, about hypothecation not needing to be mentioned in the Bill, I have no doubt that the Minister is personally committed to keeping resources within the system, but we are dealing with legislation that, with all due respect, will outlive the Minister. We cannot be certain that whoever fills his place in later years will have the same commitment.
 We are dealing with matters of principle, not just personal administration. We must be assured that at no time will money be withdrawn from failing waste 
 disposal authorities and sent elsewhere. We must get away from the twin culture that rewards the best and penalises the worst, because it creates ever-larger divisions.

Michael Meacher: I am sorry that the hon. Gentleman has so little faith in my longevity. However, I take his general point, which is often argued, that whatever Ministers say it is better to have matters in black and white in legislation. Indeed, I remember making that point myself in the long years of opposition that my party endured. My problem is that, in our view, it is not necessary to make such an amendment. I would have to persuade my hon. Friends that it was necessary, for the reason stated by the hon. Member for Lewes. However, the fact that it is being pressed is certainly relevant, and these reports are read by the relevant parts of Government. I shall be as helpful as I can on that point.

Norman Baker: The hon. Member for Bexhill and Battle is absolutely right to say that these things have a habit of slipping away if they are not included in the Bill. Personal assurances, however genuine they may be, are not necessarily acknowledged by subsequent holders of the office. We have a relatively short time to debate the Bill, and it will not be long before Report and Third Reading. Will the Minister tell us who is involved in his discussions? Does it include the Treasury? When will the discussions be complete? Will he be able to come back before enactment to confirm that it is the Government's intention that all moneys from financial penalties will be hypothecated?

Michael Meacher: That is a perfectly reasonable request. I would like to say that I could oblige, but this is a matter of considerable resonance; discussions are still going on within the Government, and I cannot say at what stage they will be completed. It depends on whether colleagues are prepared to agree, and I cannot pre-empt the possibility that they may not. I would like to be able to clarify the Government's intention by the time the Bill is considered on Report, but that is as much as I can say. I cannot give a guarantee, but I certainly hope to be able to provide clarification, and I will do all that I can behind the scenes to ensure that that is the case.
 I assure the Committee that the Government are serious about the issue and that we would like to be able to make provision, whether that is in the Bill or not.

David Kidney: Will my right hon. Friend give way?

Michael Meacher: I was climaxing in my peroration, but I am happy to give way to my hon. Friend.

David Kidney: Yes, I am waving, not drowning. In support of the hon. Member for South Holland and The Deepings on the message that the Committee sends to the Government, may I add from these Benches a voice saying that we would like the money to stay in the system? However, I agree with the Minister that we do not want to adopt the words in the amendment as they would pass back to offending local authorities the money from the penalties that they had paid, and we do not want that.
 A possible way forward, which my right hon. Friend mentioned, is that his Department has some control over money from the landfill tax credit scheme and that in future there will be extra landfill tax money. Will the Minister write to members of the Committee to tell us how the money from that scheme will be distributed to councils and to the waste and resources action programme? That might provide us with a model that we could use for this money.

Michael Meacher: I agree with my hon. Friend that the amendment is flawed in that it would not prevent what we all agree should not happen—that the transgressing authority benefits from its transgressions.

Norman Baker: Will the Minister give way?

Michael Meacher: Let me answer the first intervention, if I may. My hon. Friend the Member for Stafford (Mr. Kidney) is right to say that more money will be coming into the system. There is a further source of substantial funding that I did not mention earlier, as I referred to it in discussions on another clause, and that is the hypothecation of the landfill tax escalator increase over and above the current level, which will reach £15 in 2004. The Chancellor has already said that he will raise it to £35 with a minimum increase each year of £3, and he may decide to make it more. That is a further £20. The extra amount, if it is hypothecated when it goes to local authorities, will be very substantial indeed. It will be several hundred million pounds, and it may approach £1 billion.
 My hon. Friend also mentioned the landfill tax credit scheme. If a grant has already been made or was successfully applied for before 31 March of this year, it can be spent in the current transitional year, which extends to 3 April 2004. We are still discussing how the sustainable waste management public expenditure would operate. There is probably an extra £100 million in the system, and local authorities would benefit from a considerable amount of that. However, the exact arrangements have not yet been finalised.

Norman Baker: I wanted to deal with an assertion that has been made two or three times: that amendment No. 3 or amendment No. 50 would return fines to the offending authorities. Neither amendment says that. Both amendments refer to ''waste disposal authorities'' in the plural and, crucially, both state
''as directed by the allocating authority.''
 It would be for the Secretary of State in England and the appropriate authorities elsewhere in the country to decide how the fines would be sent back to waste disposal authorities; it would be in their power. If the amendment is flawed, it is because the Secretary of State would be giving the money back to the waste disposal authority. I do not believe that the amendments are flawed in the way that has been suggested.

Michael Meacher: I accept the hon. Gentleman's point that amendment No. 50 says—

Norman Baker: So does amendment No. 3.

Michael Meacher: Yes. Amendment No. 50 states that monies
''will be hypothecated directly to waste disposal authorities as directed by the allocating authority.''
 The Secretary of State can therefore ensure that a transgressing authority does not gain, although if I have caught correctly the sense of what is being said, there is a wish for hypothecation on an automatic basis—not dependent on political decision making—but according to the formula that precludes transgressing authorities from gaining. I may be corrected.

John Hayes: The Minister has not entirely misread the Committee, but I would put things slightly more subtly. The wish of Opposition Members—on this occasion, I am in the happy, or perhaps unhappy, position of being able to speak for the Liberal Democrats, too—is that, as a rule, there should be some transfer back to WDAs that is predictable . However, the amendment would specifically allow discretion so that that was not automatic. The general sense is that some transfer back should be the anticipated result, but there should be sufficient flexibility to allow the Secretary of State, the allocating authority, to have a degree of discretion and to intervene. In spirit, the Minister is right, but ''automatic'' is not quite the right word.

Michael Meacher: Okay. I am prepared to accept that, so I should play down, if not withdraw, the objection to amendments Nos. 3 and 50 on the grounds that they could have unintended results. I can see that, from their wording, that does not appear to be so, but I retain my present position whereby I cannot agree to those amendments because I am not yet in a position to do so. I hope that I can clarify this important matter further by the time the Bill is considered on Report, when I am sure that we will return to it. I hope that neither amendment will be pressed, on the grounds that I have indicated that the Government are serious about this matter. There is a very good precedent in statute, but I cannot take the matter further now, and I hope that the Committee accepts that.

John Hayes: It may be worth saying something about our discussion on the other amendments in the group. The Minister is right that, in general terms, these are probing amendments. The purpose of the Conservative amendments was certainly to tease out comment from the Minister and to establish precisely the Government's intention. Although amendment No. 48 would help by providing clarification, I accept the Minister's point that it is not strictly necessary because its effect is implicit in the Bill.
 On amendment No. 49, the Minister suggested that a later part of the Bill clarifies that the penalty is financial. Again, the amendment is important from a probing perspective, but I broadly accept his assurance that, although it is not unhelpful, it is unnecessary. 
 I make no particular comment on the ''may be'' issue, if I may describe it so, which the hon. Member for Lewes elucidated. Amendments Nos. 12 and 13 are in his name. 
 The important matter is amendment No. 50 and, to a slightly lesser extent, amendment No. 3. They have brought an important issue to a head. I am grateful to the Minister for expressing his views, which are close to our own, and of course I understand the sensitivity of discussions in the Government on these matters. However, my judgment is that we would want to press amendment No. 50. I think that that would be quite helpful to the Minister—he may take a different view—because it would demonstrate how strongly the Committee feels about these matters. I do not doubt for a second the absolute honesty of the Minister's remarks, but dropping the amendment at this stage would not reflect the depth of the Committee's feelings. 
 I suspect that the Minister will have the opportunity to return to the matter on Report. Far be it from me to predict such things, but the Government might table a similar amendment with slightly tighter wording—who knows? I happen to like our wording, but that is a matter of nuance, judgment and aesthetics. I am therefore inclined to press amendment No. 50 to a vote. 
 It is not for me to say what the hon. Member for Lewes will do about amendment No. 3; it is for you to test him on that, Mr. Griffiths. However, we might be inclined to support it, because, despite my earlier jibes, we very much accept its sense and content, as the hon. Gentleman knows. 
 That is where I stand on the amendments. We have had a useful debate, and we shall no doubt return to these issues when the Bill reaches its later stages.

Norman Baker: I am grateful for the Minister's serious and thoughtful response to the amendments. He probably went as far as he could in the circumstances, but the bottom line is that he could not confirm that the intention behind the amendment would become Government policy, that the words in the amendment, or similar words, would be incorporated in the Bill, or that he would be able to persuade his colleagues of the validity of our argument. He could confirm that he is supportive and sympathetic, and that he understands the arguments, but that will not necessarily produce the legislation that we want. I therefore intend to press amendment No. 3 to a vote, and I hope that that will steel the Minister's arguing power with his colleagues.

John Hayes: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Amendment proposed: No. 3, in 
clause 9, page 7, line 27, at end insert— 
 '( ) All monies in respect of financial penalties collected under this section shall be hypothecated directly to waste disposal authorities as directed by the allocating authority.'.—[Norman Baker.]
 Question put, That the amendment be made:—
The Committee divided: Ayes 7, Noes 10.

Question accordingly negatived. 
 Clause 9 ordered to stand part of the Bill.

Clause 10 - Monitoring authorities

Bill Wiggin: I beg to move amendment No. 52, in
clause 10, page 7, line 39, leave out from 'must' to 'be'.
 I shall not detain the Committee long. I seek to ensure that responsibility is retained by the authority, rather than passed to an individual. When we pressed the Minister earlier about who would take responsibility for misdemeanours, his answer was far from clear. I hope that he will take this opportunity to clarify that the allocating authority must be the monitoring authority in its own area. That is the intention behind the amendment, which is very short and very sweet. Given the time on the clock, that is quite appropriate.

Michael Meacher: I shall also attempt to be extremely quick. I am interested to hear the reasoning behind the amendment. The issue, quite simply, is who is best placed to take on this role, given the need for expertise in regulating waste operations, as well as contacts and access to data, to reduce the burdens on local authorities and the waste industry.
 For England, the answer is straightforward. The Environment Agency is the designated authority in respect of the landfill directive. It is best placed to take on the role of monitoring authority for the allowance scheme in England. The Department, on behalf of the Secretary of State, has neither the technical expertise nor the access to data to make it viable as a monitoring authority. As the skills and other attributes required already reside in the agency, I see no reason to reinvent them elsewhere. I hope that the hon. Gentleman will accept that and withdraw the amendment.

Bill Wiggin: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.